Reliance Capital, ADAG's financial services arm, is targeting disbursals of about Rs 6,000 crore ($1.5 billion) in its consumer loan business by the year-end, analysts at DSP Merrill Lynch wrote in a research note for their institutional clients.

"Its consumer finance foray continues to gather momentum and exceeds our estimates. The company has disbursed almost $400 million (Rs 1,500 crore) of loans and more importantly has tied up with auto dealers, some consumer finance dealers etc," the note said.

The company is targeting all the major segments including home loans, car loans and personal loans. Its current disbursal mix is 30 per cent personal loans, 20 per cent mortgage, 25 per cent business and 25 per cent car loans.

Projecting a rosy picture for the company in this market - already flushed with players like ICICI Bank and HDFC � DSP Merrill Lynch said: "R-Cap, being a new entrant, is not affected by any legacy credit issues and is managing to capitalise on the growth opportunities, especially as banks seek to reassess their overall portfolios etc."

It is targeting total disbursements of Rs 6,000 crore ($1.5 billion) by the year-end "which was much ahead of our current year-end forecast of Rs 3,800 crore (Rs 38 billion)," it said.

The analysts said they expect the company's year-end loan book at Rs 5,000 crore (Rs 50 billion), which could double by FY09. The loan book size was estimated to grow 10-fold to reach around Rs 16,500 crore ($4.1 billion) by FY10, they added.

However, the DSP Merrill Lynch analysts said the company was targeting more of the regular segments (as banks do) and was unlikely to be focusing on the higher risk category customers, leading to a potential erosion in the margins.

It said the consumer finance business could deliver return on equity (RoE) of over 20 per cent and has a potential of 24-25 per cent for Reliance Capital by FY10-11.

The report pointed out that R-Cap was rapidly expanding its distribution to gain market share and was aiming for 10,000 retail outlets across 5,000 locations by 2008-end, as against just 4,000 outlets in 700 locations currently.

In the life insurance business, the company could have 3,00,000 agents and over 1,500 dealers by 2008.

The general insurance and consumer finance foray were likely to be the biggest growth drivers for the company, with general insurance expected to post over 100 per cent growth through FY09 and 75 per cent in FY10.

Projecting R-Money as another strong driver, analysts said Reliance Money continues significant traction in its broking and distribution venture. Within a few months of its launch, Reliance Money has already acquired 1,50,000 customers and is adding almost 25,000 customers per month.

R-Money plans to expand its distribution network to 10,000 by 2008, from over 3,000 currently. At present, almost 95 per cent outlets are on franchisee model and it aims to to have 1,000 of own branches in the next year.

Merrill Lynch has forecast a total customer base of over three lakh by year-end and 10 lakh by FY10 for Reliance Money.